>> the stock market is missing the point, it's not a balance sheet recession. >> we like that the yield curve has widened and steepened a little bit. >> the market right now seems to be saying that jerome powell is far more impressive and important than donald trump. "bloomberg surveillance code jonathan: worldwide, good morning, good morning, this is " newburgh surveillance." we are live on the radio with lisa abramowicz and tom keene. we are stacked with event risk going into the weekend. ym: guy johnson me it's a awner, you have to ask when that to me. more important, the j&j guidance question. that's all great, retail sales

on this thursday, jobless are front and center jon: jon:. a news conference -- center. jon: a news conference over the weekend, lisa, i love this about the great depression. that after delivering record fees worldwide for the firm. just try to reconcile those things for us. lisa: it's a boom of fees in a time of incredible uncertainty coming on the heels of fiscal stimulus and the question is how do they pair these realities? we will have more on that decision at 7:45 a.m., i am watching it even though guy johnson calls it a snooze. hopefully the press conference will be less of a snooze. tom, to your point, jobless claims and retail sales are

already anxious history, but we can get a sense of how much momentum there was going into this resurgence of cases in the virus. we are also getting netflix earnings after the bell. interesting to see if some of these high flyers improve. me: you would never catch characterizing and ecb news conference that way, would you, tom? [laughter] tom: never. i said that, guy said that. as i said earlier, this is a medical issue. to do no job today is harm. jon: i would agree with you, that's the big story for us this morning. equity futures are down 20, down 6/10 of 1%. a real choppy couple of weeks in the equity market. ouran emanuel, with derivatives strategist, great to catch up to you.

cap waited s&p was outperformed. is this a rotation again or another head fake? again. the rotation the problem that we have is that the large names have become such an overwhelming percentage of the index that even though on balance the rotation into laggards isd real likely to be positive long term, it's definitely a headwind in the near term because you are in the middle of unwinding momentum. tom: what are you doing right now? your plan for action investment and equity trading? sonali: broadly -- julian: broadly in our view, you have

been in a trading range for two months at this point and we think that the range continues, but again we think that the momentum here is going to unwind, so we want to hedge the nasdaq exposure and take some chips off the table in those highest flying names which, during earnings season, it will be difficult for them to get any forward price action because the expectations are very high. example,s, for obviously the reports have been choppy. but with revenue on the trading side, they have expected earnings that are down 50%, it's really hard to see the downsides on those numbers and consequently we think they are going to stabilize. the high flyers that you expected to decline, does that mean that the facebooks, netflix

of the world, are going to decline after the open, or just underperform cyclicals? julian: well, we think you could see the nasdaq, off around 10%. coming off of 10%, it's not that much considering that we moved 12%, 13% higher in the last month alone and off the low we are well up over 50%. ways,eally, in a lot of going to blow the locks off the market and in the long-term it would be a healthy development. jon: ready to move off the bottom, if you get a 10% move lower on the nasdaq, can you get a move higher on the s&p 500? to see how that can happen with real simple math. julian: it's not likely to happen, which is why we think that the trading range from the

recent highs this week around depending on the severity of the nasdaq pullback you could probe the bottom end of the range. hearing from you is asymmetric risk towards the cyclicals? is that a fair characterization of things? julian: absolutely. people thinkber, that we are going to see choppiness. about theinking election, the hedging has already buzzed the vix curve to fall, as well as skew the option into the downside put ahead of the election, which is historically expensive. generally when that happens it means that the worst is priced

in and you are likely to get a positive reaction regardless of how the election sorts itself out, the lessening of uncertainty, presuming we have a winner on the morning of november 4. but for us the risk again is really more in the near term, looking out towards summer and labor day because of the accumulating pressure in the nasdaq and because you had this incredible volatility slingshot traded at asdaq discount back in april. now that kind of slingshot coupled with monday, monday was a key day trading over 2% above the prior day high, closing below the low. three timesppened in the history of the nasdaq. emanuel, a little

bit better tape than we saw one hour ago, so i'm going to ask you a really dumb question. a hipster that only buys etf's, i remember steel and copper being a cyclical. what's a cyclical? [laughter] julian: it's probably for the most part something that is, that has depressed valuations and reflects the continuation of the economic recession, but broadly it's really just the of financial industrial materials and energy, broadly speaking. i'm still struck on this idea of the unwind within the big tech names and the fact that this is going to come on the heels of earnings. yet there has been so much disparity around the big tech names. , gaining.tflix facebook is only up 17%.

are the losses going to names?rate into specific or is this going to be a broad-based technical unwind that is more of a broad correction? julian: probably elements of both, but we would expect the highest flyers to correct the deepest. if you think about it, part of what is unusual about the last couple of months is public participation in the markets is at a record, no matter how you measure it, particularly an options activity. some of the highest flyers are where the public has concentrated in a way that is not dissimilar to what you saw in february. this is really important and it goes back to what lisa said earlier, are you looking at the so-called high flyers to go down on an absolute basis or a relative basis? it's goingthis point

to likely be absolute. it is our view that the nasdaq corrects 10% or more. emanuel of btig, great to catch up with you, sir. retail sales shortly, with president lagarde addressing the ecb news conference in just a moment. then we will be getting more bank earnings. the bar from morgan stanley is going to creep a little bit higher. tom: fascinating to see what they do after that nuanced goldman sachs report. i don't have a clue to what they are going to say. you are going to have that three hour conversation with mr. gorman? jon: i would love an hour with him, but i think morgan stanley has given us 10 minutes. we also have to talk about the record levels of revenue amongst the various units in these banks and how it happened with the economy on its knees.

the federal reserve left the door wide open for corporations in america to issue debt. the bank has done a fantastic job making a lot of money off of that activity and the reserve has stimulated big moves in equity markets. fiscal policy has enabled these things to happen and the banks have done really, really well. there's a risk at them becoming a political football again, them doing well at a time when the economy is not. tom: ben bernanke 101, i noticed his op-ed made it very clear that this stimulus has to not help the banks this time around, but the states and local governments. jon: and that's going to be the debate out of washington, d.c. in a couple of minutes time we will get the numbers and then we will catch up with sonali basak and next, our senior analyst.

this isthan ferro and "bloomberg surveillance." >> president trump is shaking up his struggling reelection campaign last month, replacing brad parscale. parscale has been under fire for some time. it comes less than a month after in under attended rally tulsa. businesses that have been hacked , including people like warren buffett and barack obama. another come michael bloomberg, an apparent attempt to create a it going scam, sending out tweets promising to double the money of anyone sending funds by bitcoin in 30 minutes. twitter says they are investigating. the fight over coronavirus has gotten worse in texas, the state

reporting its biggest number of cases. worstrnia had its second day with 11,000 infections. san francisco and sacramento are the latest cities to announce that public students will not when schoolassrooms begins. in terms of climbing out of the slump, the chinese gdp fell from one year earlier with industrial output rebounding and consumer output still being weak. union, a newan ruling on data primacy that could affect thousands of company's -- companies. beeng that they have exposed to american government surveillance without being able to do anything about it. the warning invalidates the data privacy agreement and it could force companies to shift data

centers into europe. global news 24 hours per day on air and on quick ticks, i'm ritika gupta and this is bloomberg. ♪ jon: from new york city, this is "bloomberg surveillance." i'm alongside tom keene and lisa abramowicz. waiting for morgan stanley across the terminal, we heard from bank of america 30 minutes ago. going into those numbers, equity futures right now are down 7/10 of 1%, off by 22 points. in one hour 16 minutes we will get more data in america, retail sales and jobless claims are very much in focus. the foreign exchange, an

interesting 48 hours coming up for europe, just south of the about 1/10 ofound 1% with a slightly weaker euro going into this decision that is 30 minutes away at the ecb news conference. and then the attention shifts very quickly to fiscal authority. there is the data from morgan stanley, but here are the numbers with sonali basak. sonali: there's a beautiful beat their . t morgan stanley --here in fixed in fixed there income. wealth management revenue missing estimates, beating , morgan stanley has a lot of clientele. the question is are the wealthier clientele spending their money or hoarding it at this time? earlier today we saw bank of

america consumer spending drop off quite a bit. this is anst look at extraordinary report. i'm looking at return on equity published 15.7% with return on tangible equities being join or here after their clear presentation. it really is an exceptional report on first blush. i would note that the compensation of the expense in the efficiency ratio, that's why you didn't go to the yankees with the morgan stanley people this spring, they were trying to jon: save some money. it's not usually me -- trying to save some money. jon: that's not me who goes to the yankees with the morgan stanley people. billion, iin at 6.2 do wonder what an estimate is worth in an environment like this one. our team, and you, crunching the

numbers. the estimates were wide, wide, wide. and you can see that the bar was low for morgan stanley. going back to tom's point, the 15% return on equity is putting them in line with their longer-term goals. goldman was at 11% yesterday and we wanted to see if they would at least keep in line with that, but they are showing a strong beat. jon: coming up later we will be catching up with james gorman at 9:30 eastern and we are looking forward to that conversation. a lot to get to. you will remember coming out of the last financial crisis, it was about knowing when the world around you had changed and when you needed to adjust strategy. morgan stanley got it right and i wonder how different it is for this bank. what we are trying to do within this pandemic and the banking season is give you

voices of experience, people who have seen once-in-a-lifetime crises a few times in their lives. the heritage of the oppenheimer company securities research is a myron.an named i would say that he was a required read on might -- wall street when i was younger. christopher has carry that forward with a long tenure at oppenheimer and he came home again, thrilled that he could brief us on the banks of this nation in this time of crisis. chris, these are the extraordinary numbers for morgan stanley, aren't they? chris: across the board, it's more than 100 and 48 percent

from jp morgan. but let's not lose the trees for the forest, here. we shouldn't expect these kinds of extraordinary trading reviews to continue. the other thing though to keep in mind about all of these earnings reports is that provisions are just an accounting phenomenon. they don't create or destroy a single dollar of capital. they are just an accounting entry. whether it takes capital from the right-hand hand side of the balance sheet and moves it to the left-hand side of the balance sheet, it's a call for a loan officer. what creates capital is proof of vision earnings and what destroys r loan modules. as we have gone through these earnings reports here, one after the other, all of these banks have recorded pre-provision

earnings that were stronger than expected. it is mainly due to the trading desks this quarter, yes. it's been less than expected. , we know that as the covid lockdowns go on there will be elevated loan losses somewhere down the line. but on some level there is nothing to read into the sides of the loan loss provisions that you are seeing now because as much as i respect jamie dimon, jamie dimon doesn't know where the countries unemployed are going to be in the first quarter of 2021. >> you raised a good point, investment revenue cannot continue at the pace it has been , but morgan stanley is getting awarded in premarket trading.

can you explain the behavior of the trading ahead of the market open? from chris: i think that what is ?- open question mark - chris: if you think about goldman sachs and morgan stanley, they are historically investment banks without big loan books. the morgan stanley loan book is like 1.5. 1.5 times the tangible common equity. for a typical regional bank it would be six or seven times. the normal bank banks are going to face a bigger wave of losses than the investment banks and i think that's one reason why these stocks are breaking out better than the commercial banks.

top of that, you know, for goldman and morgan there is a lot of low loss content in their loan book. [indiscernible] jon: i think we have a bit of a problem with your line there, chris. chris kotowski, thanks for joining us. i think we have a bit of a problem with that line, tom. i hate keep bringing up the political question, but we see it again and again as the numbers come out, fantastic numbers at a difficult time for this country and the problem for me goes back to something that we discussed on this program just a couple of months ago. when you engineer monetary policy and fiscal policy and it shows up in the real economy like that, it's much, much later. who gets the leverage before anyone else? the banks on wall street. not saying that the objective

was to help wall street and no one else. clearly the objective was to keep the companies financed and keep the payroll levels maintained through this difficult time, but what do you see the banks do? leveraging the debt underwriting story and a massive way and you get that lift the leverage that story as well. we have this scenario where you have elevated unemployment levels, with record numbers across unit after unit around wall street and it's a real risk that they become a victim of their own success. tom: well you will bring it up in your own charming way with mr. gorman, john, i have no doubt about that. no such thing as a free lunch. i'm sure that all of the listeners on a global wall street are saying ok, stimulus, fed action, maybe strategic plans from mr. gorman and mr. moynahan and others, that's all great, but somewhere out there there has to be a price to this and that's a huge mystery what

it is going to be, what the price is going to be and what the wind of it as well. jon: this recession is not normal, jp diamond -- jamie dimon put it well, you will feel it, that seems to be the take away listening to the guidance from the c-suite this week. loan price to be seen in reserves, built at an unprecedented pace, more than people are expecting banks will need to. there is this question of what will be the area of growth without federal stimulus, right? that is what a lot of analysts are looking at in these earnings. there is that political question that if the largess continues, it will be a political question and if it doesn't, the banks will be considered a bastion of stability. jon: key to that, when does the consumer start to recover? the labor market hit a positive trend for a serious amount of time?

we're looking for that next phase where we see the c-suite look around and ask where they could make positive changes. you have seen it in multiple places. tom: i know that you are walking in the door at 6:52 but sometime before that there was a report that american airlines, in the articles they were talking about firings and layoffs, but the word furlough is still floating around and with jobless claims coming up in one hour and five minutes, i'm sorry, i still don't know what a furlough is in this economy. layoff's a temporary where you think you will get the job back, that's the story, and if that turns into something more permanent, that's what we are doing now. the upper east side, for 10 in the morning, i'm running. can we talk about your schedule? tom: i'm running, too. jon: down fifth avenue? tom: chasing the dog out the door. [laughter] thisfrom new york city

morning, alongside tom keene and lisa abramowicz, i'm jonathan ferro. busy couple of hours ahead. york, this is "bloomberg surveillance." ♪

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morning,sy thursday good morning to you all from new york city, this is "bloomberg surveillance." alongside tom keene and lisa abramowicz, i'm jonathan ferro, 60 minutes away from initial jobless claims in america, the ecb decision is 15 minutes away. the euro, just a little softer against the dollar this morning. the s&p 500 clinging to that 3200 level, down by 6/10 of 1%. the bond yard -- bond market, yields in on the 10 year. tom keene, a lot of data out in america a little bit later. overnight we heard from china. gdp better than expected but a lot of people zoomed in on retail sales in china underperforming. tom: exactly, john. i don't know if i trust the

data. it's not about china but i don't know if i trust the u.s. data coming out today on retail sales . i'm really interested as to whether we continue to see this gradual improvement in jobless claims. right now looking to europe and the ecb, anchor earnings, james gorman coming up later, i want to speak with jeffrey okamoto. he's the first deputy managing director at the seat of john linsky, david linton, and others. we are thrilled that he can join us this morning. jeffrey, there is a change at the imf and that will be the language of the economic outlook for the asia-pacific region the next time it is published. i think about that fancy title for hong kong, the resident representative for the people's republic of china, hong kong special administrative region. the politics and the reality

have changed in hong kong. how will the imf adapt to a new hong kong? --s great to be with you jeffrey: it's great to be with you here this morning, tom. thanks. we are still sorting through the broader implications, but suffice it to say that the hong kong business model has been challenged by the actions taken on both sides here and one thing that is important to remember is that hong kong is an important place for the world to transact. it's an important financial gateway for china and for the rest of the world and at some point people have to balance or figure out how they weigh these things in their mind as they go forward. studies on you've donency, this in your term, how will they adapt to the communist party in

hong kong? is it the significant but simplistic idea that hong kong will pick up the business or will there be gains for others? it's a chance for other firms to decide what they are doing with what's going on. asia is a big place. the question is going to be which place sets the conditions right for the capital to flow? hong kong has proven itself over time is having a very stable and predictable monetary policy, a well governed financial sector. these types of things are important for fostering this kind of activity and we will see if other regions decide to compete. we want this system of competition because over time it leads to best results, obviously. talking about this amidst and weakness of the

accelerations and the imf expects medium and small business bankruptcies could triple to 12% from 4%, currently, by the end of this year. what do you hope that policymakers do to stave this off? right now we are in a critical stage of the crisis, trying to protect the productive capacity of the economy. one, protecting human capital. their lives and their health so that they can work productively on the others of this. the other is protecting firms that would have otherwise been viable businesses. the challenge understanding which are viable and which are not at this stage in the crisis. the type of firm level support provided, by the u.s. or european governments or others, that's vastly critical and needed to make sure that businesses that cannot see the

other side of this don't have to go through restructuring. heard theirst time i word macro prudential was from john lipsky. to be blunt, folks, people were scared stiff. it was after the financial crisis. do we have enough humility over where we are, sir? you're managing director has made it real clear the situation we are in. do we understand the crisis we are in and the risk to our international system? jeffrey: the managing director is good with bluntness, i don't know what that gives me. but as this has gone on longer than people expect, the reality has set in that your policies have to be set in for the longer haul. different type of

approach than what you were taking in march or april with economies having to grapple with reopening. that is a difficult process. virtual reopening puts economic strain on the system. it's going to mean a lot in what we are studying settingely with policies and winding down the ones that are no longer needed, starting up a new ones for this juncture. lisa: how should policymakers decide which companies to save and which to let go bankrupt? >> that's a one million-dollar question on how to sift through these companies. some businesses were struggling at the beginning of this and for

all reality sake, they were never going to make it or benefit from firm support, but what we need to think about is what has structurally changed in the context of the pandemic. certain sectors are not going to be as economically viable given how their business model works. places where a lot of people are gathering, places that require a lot of human to human contact. if the business model cannot ,dapt to something virtual that's not a business model that is likely to survive without a substantial amount of support. the question is, how do you bridge them along the way in the most efficient way possible? there are a variety of ways we are seeing countries do this. each will have to take its own approach. lisa: on the one hand you have concern over emerging markets and writing down corporate debt

so that sovereignty can continue, and on the other hand you have a call to add debt to companies that are struggling to keep them going and bridge them to the other side. at what point are you talking about zombie companies, the zumba vacation of companies around the world and the concern about that growth longer-term? good question. one thing that we have to analytically analyze, something that authorities in governments -- a lot of it will depend on the solvency regime that's in place in each jurisdiction, but a lot of what you have to think about is if you were a business that was not able to produce as much revenue as you anticipated in january of this year and you had to borrow to bridge your way through this, you now have a load on your balance sheet that you will have to repay at some point. even if the interest rate on the debt is 0%. that's a costs to you in your

business going forward and now your business has a higher costs structure. thinking about higher costs structures with lower revenue base, you need a critical eye to say who can tolerate that. even though the loans may be available today, you have to take a close look at which firms won't survive under that kind of strain. jon: wrapping things up with europe, we all watched the economic tragedy unfold after the last economic crisis, watching compromises bringing mediocrity with suboptimal outcomes again and again. going into a massive weekend this friday with european leaders, what's the imf message and your message for them this weekend? geoffrey: i would say keep your eye on the prize. there's obviously a consequential ecb decision coming forward in a couple of week minutes -- couple of

minutes. it's a big week to sort through. more important than the issues around assistance for coronavirus is how europe is going to sort through questions that affect other countries, charting a path truly to growth and prosperity. it isn't going to come in a one-shot assistance package from european authorities. it's going to require long-standing things that we have all understood, increasing productivity, including competitiveness. we will wish the europeans well as they try to sort through these issues. jon: fantastic to hear from you there, geoffrey okamoto. huge weekend coming up, it starts with the ecb decision. no one is expecting much, but don't rule out president lagarde putting more pressure on them. you are more up to speed on

this than i am, but to be direct about this, it's not what they do this weekend in europe, it's the consequences if they don't do it. jon: i would agree. we need to see progress. no one expects a conclusion, but monday morning we need to wake up to some kind of progress, a mechanism to move forward and negotiate. if we don't, it's fair to say aat redenomination becomes risk again. the likes of italy, spain, and others as well, they need to help their economies recover from this pandemic that they have been hit by. they cannot act counter cyclically in the way that germany and the united states does. italy doesn't have the space. but if we can do something on integration it allows them to do something a bit more. greatohn with his expertise on frankfurt is going to dive into those headlines, but john, i will say that

between the u.s. economic data coming out in 45 minutes and what's coming out of europe, this is a thursday of consequences. to 114 zero back nine, we are almost unchanged on the day. after that decision we will catch up with alberto. from new york this morning, good morning from us all, this is bloomberg. ritika gupta: with first word news, i'm ritika gupta. brad parscale is out as the campaign advisor for president trump. iny also said more americans a poll trusted biden to do a better job on the economy. anthony fauci says -- sounds like he has had enough, firing back at critics, saying that

this bizarre behavior hurts the president, calling the attacks on him nonsense. is trump administration barring chinese communist families from coming to the u.s. and the move would almost certainly lead to beijing americanng against travelers. the international monetary fund warns that small and midsized bankruptcies may triple this year, stalling economic recovery and causing financial instability. the imf says that more than one third of the small businesses in the u.s. and south korea are worried about viability. investors interested in taking a stake in uber freight, the ride-hailing service had discussions to raise $500 million, giving them a standalone valuation of about $4 billion, operating as a broker connecting truck drivers with

shipping companies. global news 24 hours per day, on air and on quick takes, powered by 2400 journalists and analysts in over 120 countries, i'm ritika gupta and this is bloomberg. ♪ jon: from new york city, this is "bloomberg surveillance." we are live on bloomberg tv and alongside tom keene and lisa abramowicz, i'm jonathan ferro and we are moments away decision.b rate not expecting any changes to monetary policy here, the focus will be on the news conference in 45 minutes time with christine lagarde. the price action going into this , starting with futures in the united states, 19 on the s&p 500, 6/10 of 1% with nasdaq

futures underperforming again this morning and that has been the story for the last several days with big tech breaking down a little bit. with the euroy downhe low of the session, one/10 of 1% -- .01 of 1% so far. -- .1% so far. all about the ecb decision now. into tomorrow there's a meeting of european leaders. to give you a flavor of where they are trending right now, let's start with germany and the 10 year coming in at a single basis point. there is the decision, rates unchanged as expected at the ecb. the marginal facility coming in unchanged at 0.25%. the deposit rate is still -50 points. programemic bond buying

is at 1.3 5 trillion euros. most people expecting this year and next year to be something around 2 trillion euros. leaving rates unchanged, the pandemic bond by program still at 1.3 5 trillion euros, pledging as they have been to reinvest in maturing bonds through the end of 2022. so, even when they stop buying, the reinvestment will continue and it's not likely they will start raising interest rates before they start that process. we have got rates that are low for a whole lot longer. of: there is a certain set complexities here among the 57 flavors of nations, but i think one of the blunt instruments before you take us to our guest is this idea of are they in recession? it's presumed the united states was in recession with a ton of stimulus and has now escaped recession. don't hold me to that, folks. john, can we say the same thing

for europe? jon: this discussion they are having going into the weekend is about stimulus that won't be deployed until early 2021. for me this is about how you rate europe and whether we rerate europe. further integration this weekend will make it critical, the value placed on european assets. as for the recovery itself, the stimulus won't hit until 2021. that's a long, long way away, tom. we are in a rush to get a fiscal package together in the united states. the europeans are dragging their feet over money that won't be deployed for another six months. thatwhat is the so what on ? the u.s. is slow, i don't mean to make light of that, people watching and listening, their families are struggling, but what are we doing with this whole timeline in europe? i just don't understand? jon: this has been going on for

10 years. since fiscal transfer. longer than that, as you know. european integration is a problem. frugal countries don't want to share the burden of the likes of italy, spain, and elsewhere, they believe that these countries should act like you and i, managing household finances. the reason europe had a second crisis was the ecb didn't have a central bank. the problem is the denomination genie is out of the bottle and they can't put it back in. the only thing they can do now, with the ecb doing their job, committed to that outlook on the fiscal side, that's why this news conference compared to the events of the weekend, it's all about european leaders and their discussions into the weekend. no question about it, this is a good conversation to have

with someone who has real money ofrisk but also a firm grasp italy and the interdependencies of continental europe. toerto is the perfect person speak with right now. our handsto get around the guidance from earlier today, qe will carry on. shortly after it ends, they may raise interest rates. long after that they will be reinvesting these interest rates on the balance sheets, but it is not going to end for a long time, is it? tom, jon.ood morning, we're looking at at asset purchases for a long time. monitoring modern theory with prolonged asset purchases from central banks is not a new idea. we have peers in history looking

back not 10 years ago, but much longer, when interest rates were low and governments tried to use their currencies to fund large deficits. we have many recurring episodes in history where government essentially debased there currency. we are probably about to witness this type of turning point. $100 is something around trillion in global fixed income, sovereign bonds and investment rate that yielding close to 1% or below zero. are for the first time we seeing more risk that is unprecedented. a lot of these savings are essentially assuming the potential for a picture of a small rise, even a small rise in inflation. what the central banks will do is keep buying. the government bond yield will cause costs to rise because

there is too much debt. whatthis is so important you are saying, alberto. ofng back to the beginning the financial crisis, alberto, there's one big exercise in kicking the can down the road. what is the purpose of the system in europe perpetuating the process? is why allis investors are uneasy in the stock markets. but i have to say, the theory moves with market participants and there is the feeling that they will have to pay the price. that's the question you're asking, what is the price? the price for the unprecedented marginal distance could be at some point to have a higher level of inflation and here i'm reinhartgo with carmen

, who said that the lesson of history for institutions, even always improve, they are tempted to stretch the limits. some governments because they want to stretch elections or keep interest rates low, they may be trying to push at lower, increasing qe even more, going into more negative territory. given the small rise in inflation, it means negative returns on savings. ensuring that the treasury in the u.k., or the euro sovereign debt, i'm not so worried about the european breakup list, but i am more worried about multi-treasuries at 1% and about inflation going forward. that given the fact central bankers have been pushing the limit, are you expecting the ecb to start purchasing high-yield debt the way the federal reserve has in order to profit from buying

high-yield credit in europe ahead of that? therto: this is a race to bottom with every central bank and government trying to essentially get more stimulus to safeguard the investment infrastructure in each respective economy. the u.s. in the u.k. have moved aggressively. they have their own internal conflict as some countries want to do more and some don't want to do more. what they can do in addition, as you have said, they could purchase double deregulated bonds or increase the envelope to look at the difference between the negative rates that banks are receiving versus the deposit rate, essentially giving more money to banks. they are a good option that is a possibility if things get worse in the second half.

jon: alberto, great to catch up with you. coming into an important news minutes,e in about 36 christine lagarde, it will be on bloomberg radio. the focus for many, what next and how much pressure she chooses to put on the european leaders over the weekend. tom: i hope that everyone heard there mr. gallo's earnestness. it's being lost in the pandemic and particularly in the professional posturing of politicians. that was a grim as he cited -- alberto gallo. have been more constructive looking at europe, relatively speaking what, with how they have responded on the health care side of things. they have more faith in a durable uptick, engineering a

safer reopening than what we have seen in the sun belt. but on the fiscal side they haven't gotten it done together in the way that they need to, which is why this weekend is critical to move things forward and leave some of these issues behind. europe has always gotten it done in the crisis, but the outcome has always been suboptimal and i hope we can change that. good charts appear, with the yield coming in from different european papers, the yield is towards the lower end of the crisis now, and again the crisis -- the caution that we saw from mr. gallo. the equitysofter in market going into the opening bell, the euro changing the news coming into that news conference. on the equity market, a conversation that you don't want thisx -- miss next on

program. from new york, with tom and lisa, i'm jonathan ferro. this is bloomberg. ♪ it's pretty inspiring the way families

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>> the stock market is missing this point. this is not a balance sheet recession. >> we like the fact the yield curve has widened and steepened a little bit. >> the market seems to be saying that jerome powell is far more impressive and important than donald trump. >> this is bloomberg surveillance. tom: good morning. bloomberg surveillance on bloomberg television. thrilled you are with us. those of you working at home, thank you for joining us for your morning brief